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Economy in Brief

U.S. Gasoline Price Increase Discourages Driving
by Tom Moeller  March 20, 2012

Pump prices for regular gasoline rose another four cents. Last week's gain to $3.87 per gallon pulled them up sixty-four cents (19.8%) during the last four weeks to their highest since last May. Reduced seasonal demand typically fosters lower gasoline prices this time of year, but they haven't followed the norm. Haver Analytics' seasonally-adjusted price for regular unleaded held steady at a record $3.94 for the third consecutive week. Yesterday, the wholesale price for a gallon of unleaded was $3.20 versus $3.11 averaged last week.

Higher prices are killing gasoline demand, last week to near its lowest level in roughly ten years. Also falling were the demand for residual fuel oil used for heating, down 60% y/y, and distillate demand, off 7.1% y/y. Inventories of crude oil and petroleum products slipped 0.9% year-to-year compared to a 10.0% rise during mid-2009.

Offsetting the gasoline price strength has been weakness in natural gas prices. Last week's price of $2.11 per mmbtu was off 45.3% y/y. Yesterday prices held at $2.13, still the lowest since 2001, down from the early-January 2010 peak of $6.50.

The price for a barrel of light sweet crude oil slipped last week to $106.13 but still was up sharply from the low of $79.71 this past October. Yesterday, the cost of crude rose back to $108.09. Prices peaked at $113.93 last April. Brent crude slipped last week to $126.14 per barrel and was off  another twelve cents yesterday at $126.02.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the gasoline demand figures are in OILWKLY.

Weekly Price 03/19/12 03/12/12 03/05/12 Y/Y% 2011 2010 2009
Retail Regular Gasoline ($ per Gallon, Regular) 3.87 3.83 3.79 8.6 3.52 2.78 2.35
Light Sweet Crude Oil, WTI ($ per bbl.) 106.13 106.31 107.49 6.4 95.14 79.51 61.39
Natural Gas ($/mmbtu) 2.11 2.24 2.44 -45.3 3.99 4.40 3.95
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